This disclosure relates to methods and systems for processing electronic documents and, more particularly, to methods and systems for processing financial instruments through an electronic clearing system.
The Check Clearing for the 21st Century Act, or Check 21 Act, was signed into law on Oct. 28, 2003. Provisions of the Act took effect on Oct. 28, 2004. This law allows a financial institution to receive a paper check, create a digital version of that check that includes a digital image of the check, and transmit the digital version of the check to another financial institution, such as the payee bank. The recipient institution may convert the digital version of that check back to a paper check, called a substitute check.
The ability of banks, the Federal Reserve (“Fed”) and other financial institutions to work with digital check images has facilitated the presentment and clearing of financial instruments. It is no longer necessary for retailers, banks or other financial institutions to transmit paper checks for the clearing process in order to receive payment. Rather, banks and other financial institutions may utilize electronic clearinghouses, such as Small Value Payment, Co. LLC, to facilitate the high-speed and reliable image exchange between member banks and financial institutions.
The Fed, the central bank of the United States, also provides electronic check clearing services for member institutions. A per item fee is assessed to banks and other financial institutions utilizing the Fed for clearing checks. As a result of variations in traffic volume over the course of a business day, the Fed charges per item fees for clearing checks that vary depending upon the time of day and the day of the week.
For example, the fees listed in the table of FIG. 3 are taken from the Fed's 2008 FedForward Fee Schedule. The table shows the per item fees charged for a mixed image cash letter for Tier 1 electronic endpoints. (The listing is simplified from the actual schedule and does not show, for example, availability of services by day of the week, or per item fees for Tier 2 and Tier 3 electronic endpoints.) As shown in the table of FIG. 3, each banking day contains many deadlines for sending check items to be cleared by the Fed. Checks forwarded for clearing by the 3:00 p.m. deadline are charged $0.010 per item. Checks forwarded for clearing by the 6:00 p.m. and 8:00 p.m. deadlines are also charged $0.010 per item for items in a mixed image cash letter. Although the per item fees are the same for items forwarded for clearing to Tier 1 electronic endpoints after the 10:00 a.m. deadline, through the 3:00 p.m. and 6:00 p.m. deadlines, to the 8:00 p.m. deadline, the intermediate deadlines have associated with them fees for other operations, such as clearing items to substitute check endpoints, that vary from one deadline to the next.
Referring again to FIG. 3, the most expensive per item fee is assessed to check items cleared to Tier 1 electronic endpoints after the 4:00 a.m. deadline and before the 10:00 a.m. deadline, where the fee is $0.065 per item. It is less desirable to clear checks after the 7:00 a.m. deadline and before the 10:00 a.m. deadline because of issues of poor availability, even though the per item fee is the same. In contrast, the per item fee for items cleared to Tier 1 electronic endpoints by the 3:00 p.m., 6:00 p.m. or 8:00 p.m. deadlines are the cheapest at $0.010. Therefore, it may be desirable to clear check items to meet those deadlines.